Third-Degree Price Discrimination in Oligopoly When Markets are Covered

Markus Dertwinkel-Kalt, Christian Wey
2020 Social Science Research Network  
We analyze oligopolistic third-degree price discrimination relative to uniform pricing, when markets are always covered. Pricing equilibria are critically determined by supply-side features such as the number of ...rms and their marginal cost di¤erences. It follows that each ...rm's Lerner index under uniform pricing is equal to the weighted harmonic mean of the ...rm's relative margins under discriminatory pricing. Uniform pricing then decreases average prices and raises consumer surplus. We
more » ... ovide an intriguingly simple approach to calculate the consumer surplus gain from uniform pricing only based on market data of the discriminatory equilibrium (prices and quantities).
doi:10.2139/ssrn.3754676 fatcat:lpadfzafsbawfo5luqulgptsry